Reference no: EM133132403

Question - Theory Systems Corp. owns 70% of Practical Solutions Inc.'s common shares. On January 1, 20X2, Theory Systems purchased equipment from a non-associate for $70,000. On January 1, 20X4, Theory Systems sold the equipment to Practical Solutions for $65,000. As of December 31, 20X4, Practical Solutions still held the equipment. For the year ended December 31, 20X4, Theory Systems reported net income of $300,000, while Practical Solutions reported income of $200,000 independent of the intercompany transaction. Calculate the depreciation for the year 20X4, assuming the equipment had an original life of 10 years and Practical Solutions uses the straight-line depreciation method. Also, assume that Practical Solutions does not revise Theory Systems' original estimate of the equipment's useful life.